Regulatory bodies from countries around the world are slowly bringing DeFi into their sights. At its most basic, DeFi was created to avoid regulations. However, the latest views of regulators paint a different picture.
Just a few days ago, a report from the French central bank noted that DeFi projects could be forced to incorporate or prove that they meet governance and security rules and standards.
An ACPR advisory document notes that the new rules should also prevent intermediaries from selling highly leveraged products to casual retail investors. ACPR is the branch of the Bank of France that oversees banks and insurance companies.
Its report further notes that DeFi allows for the use of high-risk products. Such products are usually only available to seasoned professionals in the conventional financial sector.
The consultation period during which ACPR consults on a proposal will be open until May. ACPR also said it wants to “clearly” extend the Union’s planned consumer protection rules Europe to apply for DeFi facility.
In parallel, the US Treasury Department recently noted that DeFi services do not comply with rules against money laundering and terrorist financing. In fact, DeFi is posing “the most significant illicit financial risk today.” The US Treasury Department further warned that DeFi is used by North Korea and fraudsters to launder dirty money, which could threaten national security.